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Observations on Employee Ownership

Is It Too Risky Not to Be in an ESOP?

Corey Rosen

April 3, 2015

(Corey Rosen)Reporters and skeptics often ask us "isn't it too risky to be in an ESOP?" After all, they say, you could lose your job and your retirement.

It's an understandable concern, but the real question should be "Is It Too Risky Not to Be in an ESOP?"

Using data from the Employee Benefit Research Institute for non-ESOP plans and an analysis by the National Center for Employee Ownership of Form 5500 annual retirement plan filings for ESOP companies, we can answer that question quite clearly. Let's imagine you are taking the first job you expect to last a long time. We'll assume you have a private sector job. Here are your prospects for retirement plans:

Now imagine instead you go to work for an ESOP company. Here are your revised prospects:

So which is riskier? Being in an ESOP or not being in an ESOP?

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